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Please answer the following: Agro International has a foreign subsidiary, which requires $200K cash every month. It uses a wire service for the cash transfer.
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Agro International has a foreign subsidiary, which requires $200K cash every month. It uses a wire service for the cash transfer. The cost of wire transfer is $110. In order to send cash to its subsidiary, the Agro has to liquidate part of its securities portfolio which generates 12% annual return. How many wire transfers PER YEAR should Agro make? (Hint: Use the Baumol Model. The annual rate of return in this question is given as 12 actual monthly rate of return. You can round off to the nearest whole number, for example if your answer is 17.62, you can answer 18.) YourStep by Step Solution
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